President of Council Randy Danbury called Council to order on November 4, 1998 at 7:00 p.m.
The governmental body and those in attendance recited the pledge of allegiance.
Mr. Knox took roll call. Present were Council members Galster, Manis, McNear, Pollitt, Vanover, Wilson and Danbury.
The minutes of October 21, 1998 were approved with 6 affirmative votes. Mr. Danbury abstained.
E-mail from Melanie Bradley addressed to Mayor Webster, Mr. Osborn and Mr. Parham Ė "I am a resident of Springdale and live in the Glenview subdivision. I want to commend the person and persons responsible for the repaving and reassignment of traffic lanes, that is, turn lanes, at Vista Glen and Sharon Road. It has really helped with the traffic patterns and bottlenecks. It also looks very nice and was well worth the wait. I am encouraged by this that the City of Springdale is making the right moves to become an even better place to live.".
Mr. Danbury asked Mr. Wilson, Chairman of the Finance Committee to lead the discussion. Mr. Wilson requested comments from the Council.
Mr. Galster said the plan is titled "Preliminary Calculation of the Debt Service" for basically the Community Center. I think it is trying to show what kind of debt the City would incur, 1) if they had to finance the complete amount over a 10 year term; and 2) show it as a more manageable amount and what we would need to do to get to that amount. Itís awfully difficult to say this is what we are going to do until we actually get to that point. We donít know what the bottom line number will be when it gets to the point of needing to bond. This gives everybody an idea of what kind of commitment itís going to take in order to get to the page 3 table of financing only $6 million. If you look at your five year budget there are things in there for next year that we are putting in at 100% even though weíve applied for funding. That will help cut some of the money we need to cut, at least the first year, to make the $6 million number work. I think that this is a good starting point of something that we can look at and use as a guideline for something to shoot for. I think we are kidding ourselves if we say letís adopt this plan and this is exactly what we are going to do.
Mr. Wilson stated that there are some things on the five year budget that we looked at from a preliminary standpoint. When we actually get to the year-by-year there are some things we can back off a year. This packet here is the wish list from every department and certain things the Administration was able to stretch out. There are funding avenues available that we have yet to investigate or hear from. There is also some budget tightening that we can do each year to try to get close to what we need to continue to fund this community center project.
Ms. Manis asked Mr. Osborn, did you prepare this document?
Mr. Osborn replied yes, I did it as a work paper to put before Finance Committee in order to help structure discussion of the long term debt that we are going to have to retire and to give Council some perspective on how this will impact our Capital budget. I think itís a balance between trying to accomplish as many projects as possible while at the same time, keeping debt to a minimum. Thatís why itís hard for me as the Administrator to tell you what to do here. You have to select what you feel is comfortable. As was indicated initially, the first part of this exercise sets up a worst case situation. The following scenario picks one of many alternatives that might be the way this is approached. Whether Council selects to roll that annually for five years, six years or ten years, is really a call you will have to make; and how much money you will want to take out of the projected deficit every year will have to be set by City Council. Our purpose in putting this before the Finance Committee was to demonstrate that debt service is going to be a significant factor over the life of the next five year budget; but even beyond that for the next 15 to 18 years.
Ms. Manis said say we start construction. Do we have any idea how we will spend this money? Will it be each year or all at once?
Mr. Osborn replied I tried to break that out in the five year budget. Iíve distributed a summary. You can see how the money is anticipated to be spent over the next three years. How can we tell right now how much weíll have to borrow in 1999?. We canít say definitively right now but this gives a good idea that we will be borrowing in the magnitude of millions of dollars in 1999. At some point we are going to run out of money in 1999 and we have to have operating capital to keep the City going. Council will have to make a decision about borrowing money and it will most likely be on an annual note for this first time through. We will make this decision based on our best projection at that time.
Ms. Manis said my other question is about notes versus bonds. When you issue municipal bonds, can you have so many that are callable a month or is there a set time frame you have to leave them out there?
Mayor Webster replied you can issue either one.
Ms. Manis said I feel more comfortable issuing a short term note the first year and maybe the second; and then maybe not waiting the five or seven years to roll notes. When we know how much debt there is and how much we need to retire, then I think we should issue bonds for the rest of it. Itís very hard to get a grasp on it when the numbers are guesses.
Mr. Osborn responded I think the purpose of the exercise is to put our arms around the fact that we are going to have to make sacrifices unless we just want to continue to push the debt out in front of us and let somebody else worry about 10-15 years from now. We will have to seriously look at trying to reduce our debt either through increased revenues and more likely, through reduced expenditures. The only way to do that is to decided to cut things out of the budget. This exercise targeted trying to cut about $600,000 out of the budget every year.
Ms. Manis said based on the five year budget, it is a sacrifice. Even without this municipal building we were still projecting that our expenditures were more than our revenues this year anyway. At some point we are going to have to make big decisions whether we do this building or not. In the numbers you gave there was only a $900,000 per year increase from last yearís five year budget to this year.
Mr. Osborn stated if you look under Capital Improvements in 1998 that number is big compared to the previous five years when we averaged $1.5 million. In the 1998 budget we had a capital budget of almost $17 million and weíve jumped that up to $21 million.
Mrs. McNear asked Mr. Osborn could you could just give a brief overview of the options because the people listening on TV will not know what the options are?
Mr. Osborn said Council can elect to roll notes until they choose not to and then they can roll bonds. In order to give you something to work from I made the assumption that notes would be rolled for five years and then a ten year bond would be issued. I first went through that exercise assuming that no debt would be paid down on those notes. That debt would continue to be carried every year including the interest on that debt. Then I showed what a ten year bond would cost and the consequence of that type of financing.
If you use that scenario of five year notes and then a ten year bond, how could we deal with that and have a debt load that would still allow us to have a capital improvements program? I wanted to try to get that debt load down to less than three quarters of a million dollars. Essentially we backed into how much money weíd have to reduce the debt each year during the period that notes were being rolled in order to get the debt down to $6 million for the ten year bond. In the course of doing that between the worst case scenario and the alternate of trying to pay down the money, you save about $1.4 million in interest. I didnít intend this to be a recommendation or suggest that we lock ourselves into something like this. Itís merely a vehicle for trying to generate this type of discussion so that we can all be aware that there is a real liability out here that we have to prepare for. I think Council has to give us some guidance as to how deeply they want to cut into that annual debt in order to reach a goal. If your goal is to keep that debt down to $6 million that gives us an indication of how much we have to keep out of the budget every year. We will have to work with you to make that happen.
Mrs. McNear asked if we want to get this down to $6 million in 2005, if we use Table 1 we have to pay the interest payment plus?
Mr. Osborn said if you look on Table 5, it shows you the fact that you have to reduce the expenses by $600,000 every year. That assumes you are still rolling the interest over but the interest is part of the total cost that you have to reduce the following year by $600,000. In 1999 the debt I started with was $3.8 million. That jumps to $6.9 million in 2000 with the additional expenses we are incurring as well as rolling in the interest from the 1999 note. You then have to reduce that number by $600,000 from that first table so that you end up with $7.1 million at the end of 2000 for your total debt. If you do reduce the debt from expenses by $600,000 each year you can get the year end debt by the year 2004 down to $6.3 million.
Mrs. McNear asked so we would be paying the interest payment plus something on the principal?
Mr. Osborn replied the interest becomes part of the next yearís debt. You have to reduce the expenses.
Mayor Webster said if you look on Table 5, we have to reduce the difference between the ending balance which is total debt and the beginning balance of the next year. We would have to realize increased revenues or expense savings of $715,000 a year in order to arrive at a $6.3 million debt at the end of year 2004.
Mr. Osborn said if you look under Debt from Expenses on Table 2 on the first page, in 1999 itís $4.1 million. You take $600,000 out of that number and you get to $3.8 million. The next year you have $8.149 million. Now you have to take $1.2 million off that number because itís cumulative. The year 2000 number you see on Table 5 is $1.2 million less than the number on Table 2. Iím still carrying the interest forward but reducing the expenses by $600,000 a year.
Mrs. McNear said so if we pay $600,000 a year for the first five years, then we can pay $739,000 in 2005 and be at zero at the end of those ten years.
Ms. Pollitt said I would like someone to explain to me what you are referring to when you talk about sacrifices, increased revenue and tightening of the budget.
Mr. Galster said if you look at the five year budget, the West Kemper Road project is important and should be done whether we get outside financing or not so itís in at its full amount. If we do get the funding that we have applied for we would save about $285,000 on that.
Ms. Pollitt said that money will automatically be rolled into the debt.
Mr. Galster replied not automatically. Council can spend that money if it wants. If we want to make sure we are being fiscally responsible then you pay off the debt with those type funds. The East Kemper Road lane addition construction over the course of two years has a $940,000 and $313,000 expense. Again, this is put in at 100 percent. If we get funding it saves $625,000 over those two numbers. The money saved from those two projects can go towards the down payment before we go into the bonding of whatís left after five years. Each and every one of us is going to need to make decisions as opposed to what is important enough to be in or not. I have a hard time answering that question because I donít know how the seven members up here will vote on every issue we look at. Each of us has to decide where weíre willing to cut, where can we increase revenue and where can we get funding. Every time we have an ordinance that requires money, thatís when youíll decide whoís cutting what.
Mayor Webster said my light has been on since Ms. Manis asked about the payment schedule. Usually once a project has been bid and we know the timing of it, the engineering staff can give us a pretty good idea.
Mr. Wilson said bids sometimes come under, sometimes over. When we saw the initial blueprint it was like a blue sky, a Cadillac. When we actually get to the construction, one area might need less sound deadening material than others. Maybe some doors can be hollow instead of solid doors. Maybe a year from now certain prices we have allocated for jobs will be less. This is our worst case scenario. When you talk about sacrificing, I donít anticipate that we are going to sacrifice those things we need to keep. There was concern about the paramedics. I donít want the public to assume that we are going to be cutting needed services. There are certain things in the Community Center that we can go back another year. We donít have to do it in the year 2000. These are some of the comments the recreation staff brought to my attention when I talked about it. I think we are still in the cost cutting stages. These numbers are not absolute.
Mr. Galster said my personal opinion is that Iím not going to cut anything as far as police and fire go, anything that would jeopardize public health, safety and welfare. We have looked at this financing package over a ten year period. If it got to the point that something would come up such as a ladder truck goes down and we need to replace it earlier, thereís nothing that says we canít do this over a 15 year payment plan. Originally we looked at 10, 15 and 20 years and nobody wants to put it out over 20 years. The Finance Committee with Administration decided that ten years is as long as weíd like to go with it and this is what we have to work toward.
Ms. Manis said I look at it as using notes as the construction loan, then once the construction is done you roll it over into bonds like paying the mortgage.
Mayor Webster said I think that is fine, Ms. Manis, as long as you are willing to buy into the concept of financing longer than ten years. You talk about trading off some of the note years for bond years and at the end of the day you end up with the same thing. Thatís a good point. We donít want to get ourselves in a situation where we have $1.269 million a year in just debt service because that will totally eat up the capital improvement program for a number of years and weíll be lucky to do a summer street program, let alone buy a fire truck, ambulance or anything else. As far as Iím concerned thatís the most important number of everything we see here.
Ms. Manis said Table 3 is Table 4 without being paid down.
Mr. Galster said Table 3 is with every item in the budget, every wish list item accounted for because we are financing more than the Community Center costs. Itís as worst case scenario as you can get based on everybody getting everything that they want.
Mayor Webster said I take exception with calling it a five year wish list. There are things are there that are filtered out. Itís not Christmas morning for every department director.
Mr. Osborn stated I did not edit out any operating expenses any department directors wanted, but the capital budget is a combination of what has been discussed by Council or the Administration. There may be other things that department directors have suggested to us that we donít feel is credible enough to compete with the things that are already on the table, such as the total replacement of the sprinkler system at the Community Center. Weíve pushed that back to 2003. The department director had it in 1999. Some things have been pushed back farther than 2003. There are some trucks that have been pushed all the way off the chart. I asked the department directors for two dates, the typical replacement date and the critical replacement date. I honored their critical dates but I did not in every case honor their requested replacement date.
Mr. Knox said the scenarios we have been hearing here until the Mayor and Mr. Osborn addressed it, are all things that can go better. I must remind you that some things can go worse. The time to start saving money is right now. Every dollar we save at this time is going to pay us $1.50 down the line. Starting in January I intend to, on a monthly basis as part of my report, show you exactly where the City sits, how much money we have at that time that we can use for funding this program. If we do this properly I see us getting below the $6 million figure but weíll have to work at it.
Ms. Pollitt said on page 5 of the Capital Improvements Plan, I donít see any police cars. Are we set on that?
Mayor Webster replied those are funded out of the general fund. Mr. Osborn said there are so many items that we treat under General Fund.
Ms. Manis said I noticed that the sprinkler system is not in here. I wondered if that was rolled into the cost of the expansion.
Mr. Osborn responded that the sprinkler system was pushed out beyond 2003. It was not rolled into the cost.
Mayor Webster said what I hear is we will include $3.8 in the sale of debt in 1999.
Mr. Wilson said I think as we get further and further into the year 1999 weíll see what items weíll get funding for and weíll have a better idea of exactly how much weíll need.
YEAR 200 PRESENTATION
Mayor Webster said I would like Mr. Osborn to take a few minutes to bring you up to date on our efforts up to this point.
Mr. Osborn said while the consequences of this issue are yet unknown, we as a municipality have to approach it as we would any other calamity or disaster. We have to drill and plan for tornadoes and we hope we never have one. Weíre approaching this Y2K issue in that same vein. We cannot afford to not take it seriously. I would like to begin with a tape that was prepared by ICMA and the National League of Cities on the general topic of Y2K, how did we get to this situation, what should we be doing? I think the video does a good job of explaining the fact that this is a public information issue as much as it is a technical issue.
After the film Mr. Osborn continued saying the video explains things pretty well. We are probably at a better starting point than many jurisdictions because we have just recently replaced critical hardware and software. The systems that will be most susceptible to Y2K issues are PCs built before 1997 and Cobalt based software systems. We have taken the planning packet that PTI (Public Technologies Inc.) has prepared and weíre using that internally here in Springdale. Essentially that calls for a number of steps. The first is an inventory of all City owned or leased systems, not just computer systems but other institutional systems such as the fuel pumps that pump the gasoline into our vehicles; the computers that operate our HVAC systems, the computer that operates the elevator. There are a lot of embedded systems that are transparent on a day to day basis. Once we have identified the ones that may be susceptible to Y2K problems, weíll start prioritizing and looking at which ones are most critical. Then weíll start testing those. Once weíve identified the problem systems weíll then undertake the necessary corrections. That takes care of our internal operations.
But there are other things we have to be concerned about. We contract with Hamilton County for the communications system, for our civil defense warning system. There are a number of regional types of services that we depend on. We need to work with those various agencies and verify what their status is. There are regional utilities that we have no direct control over but which we are dependent on, gas and electric, water, telephone. We have to be aware of what those utilities are doing and what the consequences are should any of those fail. We also have to be aware that this is an economic issue as well as simply a governmental issue. We want to talk to some of our major industries as to how they are approaching this issue. Internally, we have broken down areas of responsibility: business systems, Rhonda Burton; LAN system, Debbie Dunfee; vendors including bankers, Rhonda Burton; institutional systems, Dave Butsch; regional governmental services and utilities, contact with the business community, Cecil Osborn.
There are two systems already identified in the City that would not have worked without some kind of intervention. The system in the Tax Department is a PIC based system and it was operating on an R83 computer. That computer was not Y2K compliant and would have to be replaced. The tax package has to be upgraded. The alternate to buying a new machine was moving the Tax Departmentís application system to the system in the Finance Department. We have a similar situation with the court system. Our court package is also a PIC based system operating on an R83 computer. Our alternatives for that is to move it up to the computer in the Finance Department or we are looking at a county-wide court system that is being put together that may or may not be available by the time this issue has to be addressed. The other business systems we have, most of which are through CMI, have been certified by the State Auditor as being compliant. Because of our contractual agreement with CMI we get an automatic upgrade for those packages. Part of our software maintenance agreement will cause all our business systems software to be upgraded to Y2K compliant. The one possible situation in terms of our business operations is that we may to move the Police Department up with expenses of $6,000 to $8,000 to do that. I am proposing to put a $100,000 in the other contractual services line item in general government as a way of absorbing this. This may be spent out through various departments through their communications budget. We wonít actually expense the money against that item. It will be there at the end of the year for money we may have to transfer to other line items to cover it. The message is that we need to assure our community that we are taking very prudent steps to make sure that this issue will not become critical. We are also looking at preparing contingency plans for what if. What if we see a power failure. Suppose Cinergy is okay but they are buying power from somebody else and that system is interrupted and we lose electric service for a period of time. How can we be independent of Cinergy in terms of critical services? Thatís not to say our residents wonít be without power but how can we provide them shelter? How can we make sure that our facilities stay up and operating during that period. We do have generating systems within our buildings but we want to make sure that they are compliant. We want to make sure we have fuel on hand. How do we manage traffic problems and major intersections? How do we pump the fuel out of the tanks? We have a new system at the municipal garage and we donít have a way to hook up a generator so we are going to wire in the capability of putting that system on a generator. We do not have all the answers. This is too complex an issue for us to claim that there absolutely will not be a problem. There will be an article in the upcoming newsletter trying to explain to the community pretty much what you heard this evening. There are three more newsletters before the end of 1999 and we plan to have an update in each one of those informing the community as to what weíve done since the last update.
Ms. Manis asked are other places required to get certification from the auditor and will we get copies of that?
Mr. Osborn replied on our newer systems we are getting documentation representing that they are compliant. Same with the software. Our next committee meeting is December 5 and we are going to have the various committee members turn in the certifications they have received so far.
Ms. Manis asked can we get one from Cinergy? Mr. Osborn said I approached Dave Krings last week about trying to organize some sort of effort at the county level to discuss this issue. Rather than having every jurisdiction within the service area running to them and asking the same questions, wouldnít it make sense at the County level if we had some sort of workshop where we brought in all the major utilities, the communications center, civil defense and we have a big meeting where all jurisdictions can attend and ask any questions. You need to be able to answer questions of the residents.
Mr. Danbury asked would the closed loop system be protected?
Mr. Shvegzda replied the Springdale system is not tied into other systems and is protected.
Mr. Osborn said we have a meeting scheduled with the Police Chief, Mr. Shuler, and Ali Saleh to discuss that topic. We want to find out how susceptible is our signal system and whatís our fallback. What do we do with major intersections like S.R. 747 and Kemper Road or Springfield Pike/Crescentville if we donít have electricity. We used to have emergency generating capability that we could tie into these major intersections. We donít have that at present with the closed loop system. One of my questions will be is there a way to do that without causing some sort of danger to the Cinergy people who will be out there working.
Mr. Danbury asked if anybody has been in contact with CSX. Mr. Osborn replied no. In some cases we will have to rely on stop signs. We already have stop signs assembled on posts that you can put up at intersections if the power goes out.
In response to Mr. Danbury, Mr. Osborn stated we already have a backup plan in effect. We back up daily on our major systems. We have to have a full backup off-site so Rhonda is taking those home right now. We have arrangements with other cities that run the same types of software we have that we can use each otherís systems in case we lose our particular system. Mr. Parham is responsible for our information systems disaster plan.
ORDINANCE 66-1998 "ORDINANCE AMENDING THE CODE OF ORDINANCES OF THE CITY OF SPRINGDALE, OHIO AMENDING CHAPTER 112 VENDORS AND SOLICITORS"
Mr. Vanover made a motion to adopt and Ms. Pollitt seconded. Ordinance 66-1998 passed with 7 affirmative votes.
RESOLUTION 11-1998 "RESOLUTION ACCEPTING THE AMOUNTS AND RATES AS DETERMINED BY THE BUDGET COMMISSION AND AUTHORIZING THE NECESSARY TAX LEVIES AND CERTIFYING THEM TO THE COUNTY AUDITOR"
Mr. Vanover made a motion to adopt and Mrs. McNear seconded.
Mr. Osborn said the Budget Commission has ratified the projections we sent down to them last June. The numbers you see on Exhibit A reflect our figures. The last page says we will have to consume a little over the $500,000 of the $1.2 million that the 3.08 levy will generate in order to reach 0, which will leave us with a balance of $700,000+ at the end of 1999 and thatís the figures that we sent down to the County Budget Commission.
Resolution 11-1998 passed with 7 affirmative votes.
RESOLUTION 12-1998 "DECLARING THE NECESSITY AND INTENTION TO APPROPRIATE PROPERTY FOR THE CITY OF SPRINGDALE URBAN RENEWAL PLAN (SAM BURNS PROPERTY)"
Mrs. McNear made a motion to adopt and Mr. Vanover seconded. Resolution 12-1998 passed with 7 affirmative votes.
Mayor Webster said in Section 3 it says the City Administrator of the City of Springdale through the Law Director is authorized and directed to cause written notices of the adoption of the resolution to be given to the owners, persons in possession. Would that be lease holders? Mr. Schneider replied yes.
Mrs. McNear asked if we had heard anything back on the deer problem. They are a real problem on Springdale Lake Drive.
Mayor Webster said I wasnít aware that we were supposed to be doing anything. We had gotten information from the Ohio Department of Natural Resources as a follow up to a problem Avon had a few years ago.
Ms. Manis said a while back when we were talking about some of the tax issues that were going on, you said Mrs. Burton reviewed all the returns before they are sent out. Do we have someone else to do that while she is on maternity leave or are we not going to send any back?
Mr. Knox said Mr. Osborn and I are going to meet with Mrs. Burton on Friday and discuss who is going to handle what. She has made extensive plans in this area. We just havenít had a chance to review them all yet.
NEW BUSINESS - none
MEETINGS AND ANNOUNCEMENTS
Planning Commission - November 10
Board of Health - November 12
Board of Zoning Appeals - November 17
Ms. Pollitt said I will be attending a community leaders conference on November 18. Itís put on by Cinergy.
COMMUNICATIONS FROM THE AUDIENCE - none
UPDATE ON LEGISLATION STILL IN DEVELOPMENT
Newsracks in public right of way - open
Amending contract with Barret Paving - December
RECAP OF LEGISLATIVE ITEMS REQUESTED - none
Council adjourned at 8:38 p.m.
Edward F. Knox
Clerk of Council/Finance Director
Randy Danbury, President of Council